Bills of lading – identity of the parties– shipowners entitled to benefit of Himalaya clause
Wood was shipped from 3 ports in Malaysia to Antwerp and Avonmouth under a number of sets of Bills of Lading.
The Bills of Lading were on the charterers’ standard forms and were signed on behalf of the charterers who were described prominently on the face of the bills as “the carrier”. The bills also contained two further clauses (33) and (35), one a standard demise clause, each making the owners liable on the bills despite appearances to the contrary.
The NYPE charter contained a standard “Employment and Agency” clause (clause 8) requiring the master to follow the charterers’ orders.
The bills also contained a Himalaya Clause couched in terms suggesting a total exemption of liability for the servants and sub-contractors of the carrier.
Despite the fact that the mates’ receipts indicated wetting by rain of some cargo during loading, clean Bills of Lading were issued.
Bad stowage caused substantial wetting by condensation during the voyage.
Four indorsees sued the owners in contract, alternatively, tort. The charterers were also sued but took no part in the proceedings on account of their insolvency.
Colman J, at first instance, found that the bills were charterers’ bills i.e. that the charterers were to be regarded as the carriers and dominant parties to the bills. His view was that there was nothing on the bills to indicate that the charterers, on whose behalf the bills were signed, were not also the owners of the vessel thereby nullifying the effect of the demise clause. Significant also was the fact that the charterers were described in terms as “the carrier”, a term of art designating the party primarily liable for the conduct of the voyage. Though they were not liable in contract because they were not parties to the bills, the owners were found to qualify as sub-contractors for the purposes of the Himalaya clause. Colman J found that they were entitled to the same benefits as the carrier but not to total exemption from liability because of the workings of Article III Rule 8 of the Hague Rules.
In the Court of Appeal, Rix L J agreed with Colman J on the identity of the carrier issue but not on his findings in tort (the questions in tort involved complicated issues of factual causation and are not dealt with in this note)
Chadwick L J and Sir Robert Morritt V C, the other two members of the Court of Appeal, held that the owners were liable as carriers but agreed with Rix L J on the other issues decide by him.
The entire panel in the House of Lords agreed that the owners were not liable as carriers.
Lords Steyn and Hoffmann (and to some degree Lord Bingham) set great store by the fact that the international banking code, the UCP 500, only required banking officials to have regard to the face of Bills of Lading when issuing irrevocable letters of credit and held that this influenced the interpretation of the bills, the parties being taken to have been aware of such international banking practice.
The reasoning of Lord Hobhouse on this issue was entirely different. He found that as “the identity of carrier” clause and the demise clause (clauses 33 and 35) were inconsistent with the signature box on the front of the bills identifying the charterers as ‘the carrier”, the parties impliedly agreed that the signature box clause would override clauses 33 and 35.
Lord Millett’s reasoning was simply that it served no purpose to attempt to reconcile the irreconcilable and that the provision on the face of the bills had to prevail.
The conundrum which occupied the speeches of all the Law Lords was the precise basis on which the owners would be liable – either in tort or as bailees of the cargo.
The House of Lords, save for Lord Steyn, found that the Article III Rule 8 of the Hague Rules applied equally to the carrier and the beneficiaries under the Himalaya Clause thereby requiring the enforcement of the package limitation.
This case is remarkable for the number of complex issues raised and the wide divergence in the views held by the eminent judges who considered the problems.
Lord Hobhouse came close to finding that the owners were liable as carriers.
The wording of clauses 33 and 35 indicated, in absolute terms, that the owners of the vessel were the carriers. Ownership is a fact objectively ascertainable. Both clauses also made it clear that the owners were to be the carriers despite appearances to the contrary, the relevant portion of clause 35 reading “if the ocean vessel is not owned by or chartered by demise to the company or line by whom this Bill of Lading is issued (as may be the case notwithstanding anything that appears to the contrary) [emphasis supplied] this Bill of Lading shall take effect only as a contract of carriage for the owner or demise charterer as the case may be…”.
It is not unusual for remote parties, such as the indorsees in this case, to be bound by provisions not actually appearing in the Bills of Lading. The most obvious example is where the Bills of Lading incorporate terms of a charterparty by reference. A fortiori there was no reason for clauses appearing on the reverse of the bills not to be fully operative.
If the owners had been held to be carriers, the claimants could have taken advantage of the favourable provisions in the Carriage of Goods by Sea Act of 1992 .
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